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rwbaird.com
Q4 2016 Market ChartBook
December 31, 2016
Baird Private Wealth Management
Wealth Management | Capital Markets – Investment Banking | Private Equity | Asset Management
Charlotte Chicago Frankfurt London Milwaukee Shanghai
Table of Contents
03 19 26 35
Economy & Market Domestic Equity International Equity Fixed Income
Market Highlights
The Markets at a Glance
S&P 500 Index
Economic Growth
Inflation Watch
Jobs Market
Housing Market
Consumer Health
Corporate Profitability
Market Volatility
Commodity Markets
Energy Markets
Mutual Fund and ETF Flows
Fund Flow Heat Map
U.S Equity Snapshot
Asset Class Performance
U.S. Sector Performance
Investment Style Leadership
Historical Market Valuations
Historical Sector Valuations
Mutual Fund Performance
Global Market Performance
Intl. Equity Performance
Country Performance
Sector Performance
Investment Style Leadership
Global Market Valuations
Country Valuations Ranges
Bond Market Snapshot
Maturity/Credit Performance
Yield and Volatility
U.S. Treasury Bonds
Corporate Bond Yields
Bonds Spreads
Mutual Fund Performance
Economy and Markets
Q4 2016 Market ChartBook
Robert W. Baird & Co. Member SIPC.
Q4 2016 Market Highlights
Economy and Market
Economic Growth: The US economy has continued
to steam ahead with final revisions for Q3 GDP
coming in at 3.5%, up from Q2’s 1.4% and Q1 at
0.8%. Growth has been supported by strong
consumer spending, business fixed investments and
a pick up in exports. This quarter’s GDP is the highest
growth since Q3 2014. With positive, pro-growth
sentiment put forth by President elect Trump,
economists have been optimistic about future growth
of the US economy.
Economic Health: The labor market continued to
tighten, adding an average of 165,000 jobs for the
previous three months through November. The gains
have helped to reduce the national unemployment
rate to 4.6%. Jobless claims extended the trend of
below 300,000, a streak the US has not seen since
1973.
Inflation. Under continued spotlight, core consumer
prices, which exclude the effects of food and energy,
climbed 2.1% y/o/y through November. When
including the effects of food and energy, headline
inflation experienced an increase during the quarter to
1.7%, a slight jump from the 1.6% rate recorded
through October.
Fed Speak. Given the strong sentiment and pace of
the US economy, the Fed elected to hike the federal
funds rate by 25bps. More attention, however, was
given to the pace of expected hikes in 2017. The
FOMC now thinks it will hike rates three times next
year, versus a previously estimated two. It will be
interesting to see how the Fed balances the value of
the USD and hawkish rhetoric given the divergence of
global monetary policy around the world.
Domestic Equity
At a Glance: The S&P 500 generated a strong 3.8%
return during the quarter. Investors have adopted the
pro-growth, reflationary mindset and equity markets
have benefited largely from this.
Market Cap and Style: Small and micro cap names
outperformed larger market cap stocks while value
has come back in favor relative to its growth style
counterpart.
Sector: Winning sectors for the quarter included
financials (21.1%), energy (7.3%), and industrials
(7.2%). Positive returns were largely supported by
stable oil prices, hopes of deregulation and future
fiscal spending on infrastructure. Losers for the
quarter included consumer staples (-2.0%) and
healthcare (-4.0%).
International Equity
At a Glance: International markets suffered losses of
-0.71% for the quarter relative to domestic equities.
Russian equities saw the strongest returns on the
international front, up 18.72% in Q4. Emerging
markets have followed suit with developed markets
down 4.08% for Q4. Weak performance in emerging
markets was led by Mexico (-7.8%), China (-7.1%),
and South Africa (-4.0%). Emerging markets have
felt some pressure on local currencies and the
increased support of populism/protectionism seen in
the US as well as Italy will have a negative effect on
global trade for these countries. Close attention will
be paid to the elections in France, Germany and the
Netherlands this year.
Fixed Income
At a Glance: Given the Fed’s decision to raise rates,
pro-growth sentiment and subsequent rotation into
equities, we have seen rates rise in a very rapid
fashion. The 10-year Treasury yield increased from
1.63% to start the quarter to 2.45% at the finish. In all,
the Barclays Aggregate Bond Index produced a loss
of -3.0%.
Sector: In the taxable bond market, investors again
preferred high yielding bonds over high quality. High
yield bonds and leveraged bank loans were among
the strongest areas of the fixed income market. US
Treasuries and government related securities lagged
primarily due to the negative price action from rates
rising.
Maturity and Credit Quality: Shorter maturity bonds
finished higher while longer maturity bonds were
largely negative. Among credit, high yield outpaced
high quality.
Yield Curve: Treasury yields increased this past
quarter, leading to a steeper yield curve. This
steepening, largely seen in the belly of the curve
resulted in a slope of 125 basis points, measured by
the 2s/10s spread.
Municipal Bonds: The broad municipal bond market
declined by 362 basis points this past quarter.
Concerns over an increase in supply if Trump’s
infrastructure plans come to fruition and a decrease in
demand if Trump’s tax policy proposals were to make
municipal bond’s after-tax returns less attractive has
weighed on the asset class.
Robert W. Baird & Co. Member SIPC.
Markets at a Glance
As of December 31, 2016
Source: Morningstar Direct; Russell, MSCI, Barclays, Citigroup, and Dow Jones benchmarks. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
Asset Class Last Qtr YTD 1-Year 3-Year 5-Year 10-Year 2015 2014 2013 Benchmark
U.S. Stocks
Large Cap Value 6.7 17.3 17.3 8.6 14.8 5.7 (3.8) 13.5 32.5 Russell 1000® Value
Large Cap Grow th 1.0 7.1 7.1 8.6 14.5 8.3 5.7 13.0 33.5 Russell 1000® Growth
Mid Cap 3.2 13.8 13.8 7.9 14.7 7.9 (2.4) 13.2 34.8 Russell Midcap®
Small Cap 8.8 21.3 21.3 6.7 14.5 7.1 (4.4) 4.9 38.8 Russell 2000®
International Stocks
Developed Markets (0.7) 1.0 1.0 (1.6) 6.5 0.7 (0.8) (4.9) 22.8 MSCI EAFE (Net)
Bonds
Short-Term Taxable (0.4) 1.3 1.3 0.9 0.9 2.4 0.7 0.8 0.6 BBgBarc 1-3 Yr Govt/Credit
Intermediate-Term Taxable (2.1) 2.1 2.1 2.1 1.8 3.8 1.1 3.1 (0.9) BBgBarc Intermed. Govt/Credit
Short-Term Municipal (0.5) 0.2 0.2 0.6 0.8 2.1 0.8 0.7 1.0 BBgBarc 1-3 Yr Municipal
Intermediate-Term Municipal (3.7) (0.5) (0.5) 2.9 2.4 4.4 3.3 6.1 (1.0) BBgBarc 7 Yr Municipal
Cash
Cash/Cash Equivalents 0.1 0.3 0.3 0.1 0.1 0.7 0.1 0.0 0.1 Citi 3 Month T-bills
Satellite
High Yield 1.9 17.5 17.5 4.7 7.4 7.3 (4.6) 2.5 7.4 BofA/ML High Yield Master II
Real Estate (3.1) 7.6 7.6 11.8 11.1 3.9 2.1 27.2 1.8 DJ US REIT
Commodities 2.7 11.8 11.8 (11.3) (9.0) (5.6) (24.7) (17.0) (9.5) Bloomberg Commodity
Emerging Markets (4.2) 11.2 11.2 (2.6) 1.3 1.8 (14.9) (2.2) (2.6) MSCI Emerging Mkts (Net)
Trailing Returns (%) Annual Returns (%)
Robert W. Baird & Co. Member SIPC.
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16
Ad
just
ed
Clo
sin
g L
eve
lS&P 500 Index
As of December 31, 2016
Source: Standard and Poor’s. The S&P 500 Index, computed by the Standard & Poor's Corporation, is a well known gauge of stock market movements determined by the weighted capitalization of the 500 leading U.S. common stocks. Indices are unmanaged and it is not possible to invest directly in an index.
Year-to-Date Performance of the S&P 500 Index
Q1: +1.4% Q2: +2.5% Q3: +3.9% Q4: +3.8%
Robert W. Baird & Co. Member SIPC.
Economic Growth
As of September 30, 2016
Source: US Department of Commerce: Bureau of Economic Analysis (GDP Growth)
Gross Domestic
Product (GDP)
GDP is a basic measure of
U.S. economic output.
Alternatively, it can be
thought of as the final value
of all goods and services
produced within the U.S.
Positive GDP growth signals
an expanding economy.
GDP is comprised of four
major categories: personal
consumption, private
investment, government
spending and net exports.
US GDP Growth
Contribution to U.S. GDP Growth
-10
-8
-6
-4
-2
0
2
4
6
8
10
Sep-96 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16
GD
P G
row
th (%
)
-10
-8
-6
-4
-2
0
2
4
6
8
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
Co
ntr
ibuti
on
to
GD
P G
row
th (%
)
Personal Consumption Private Investment
Govt. Spending Next Exports
Robert W. Baird & Co. Member SIPC.
Inflation Watch
As of November 30, 2016
Source: Bureau of Labor Statistics; Baird Analysis. CPI figures lag one month.
Consumer Price Index
(CPI)
A common measure of
inflation, Headline CPI tracks
a broad basket of goods and
services relatable to most
consumers. Core CPI
excludes Food and Energy
due to the volatile nature of
those categories and the
distortive effect it can have
on the broader inflation
measure.
Historic CPI Level
-2
0
2
4
6
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Ye
ar-
Ove
r-Y
ear C
hang
e in
CP
I Headline CPI
Core CPI
Components Weight (%) 12-mo Change (%) Components Weight (%) 12-mo Change (%)
Headline CPI 100 1.7 Core CPI 79 2.1
Housing 42 2.9 Food 14 (0.4)
Energy/Transportation 15 0.5 Energy 7 1.1
Food & Beverage 15 (0.4)
Medical Care 8 4.9
Education 7 (0.3)
Recreation 6 0.8
Apparel/Clothing 3 0.1
Other 3 1.8
Headline CPI Core CPI: Headline less Food and Energy
Robert W. Baird & Co. Member SIPC.
4.6
9.3
0
3
6
9
12
15
18
Nov-06 Nov-08 Nov-10 Nov-12 Nov-14 Nov-16
Un
em
plo
ym
en
t R
ate
(%
)
U-3 Unemployment Rate
U-6 Underemployment Rate
-1,000
-800
-600
-400
-200
0
200
400
600
Nov-06 Nov-08 Nov-10 Nov-12 Nov-14 Nov-16
Ch
an
ge i
n P
ay
roll
(0
00s
)
2.6
0
1
2
3
4
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
Wa
ge
Grr
ow
th (%
)
62.7
60
63
66
69
Nov-06 Nov-08 Nov-10 Nov-12 Nov-14 Nov-16
Pa
rtic
ipa
tio
n R
ate
(%
)
Jobs Market
As of November 30, 2016
Source: US Department of Labor: Bureau of Labor Statistics. Data will lag one month and is subject to revision. Wage growth is calculated quarterly and will lag one quarter.
Consumer Price Index
(CPI)
A common measure of
inflation, Headline CPI tracks
a broad basket of goods and
services relatable to most
consumers. Core CPI
excludes Food and Energy
due to the volatile nature of
those categories and the
distortive effect it can have
on the broader inflation
measure.
Jobs Gained/Lost Unemployment and Underemployment Rates
Labor Force Participation Wage Growth (y/o/y%)
Robert W. Baird & Co. Member SIPC.
Housing Market
As of November 30, 2016
Source: Standard & Poor’s, US Department of Commerce: Bureau of Economic Analysis.
Consumer Price Index
(CPI)
A common measure of
inflation, Headline CPI tracks
a broad basket of goods and
services relatable to most
consumers. Core CPI
excludes Food and Energy
due to the volatile nature of
those categories and the
distortive effect it can have
on the broader inflation
measure.
S&P/Case Shiller Home Price Index (20 City) Average Selling Price of New and Existing Homes
Housing Affordability Index Home Starts/Sales
100
120
140
160
180
200
220
240
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Ind
ex
Le
ve
l
$125,000
$175,000
$225,000
$275,000
$325,000
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Median Price (Exist ing)
Median Price (New Homes)
80
100
120
140
160
180
200
220
240
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Ind
ex
Le
ve
l
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Un
its (000s)
New Housing Starts
Existing Home Sales
Robert W. Baird & Co. Member SIPC.
Consumer Health
As of November 30, 2016
Source: Thomas Reuters/University of Michigan, US Department of Commerce: Bureau of Economic Analysis.
Consumer Price Index
(CPI)
A common measure of
inflation, Headline CPI tracks
a broad basket of goods and
services relatable to most
consumers. Core CPI
excludes Food and Energy
due to the volatile nature of
those categories and the
distortive effect it can have
on the broader inflation
measure.
University of Michigan Consumer Sentiment Survey Consumer Spending Growth (y/o/y%)
Personal Savings Rate Personal Income Per Capita
50
55
60
65
70
75
80
85
90
95
100
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Ind
ex L
evel
-4
-2
0
2
4
6
8
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Co
ns
um
er
Sp
en
din
g G
row
th (%
)
$32,000
$34,000
$36,000
$38,000
$40,000
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
0
2
4
6
8
10
12
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16
Pe
rso
na
l S
av
ing
s R
ate
(%
)
Robert W. Baird & Co. Member SIPC.
Corporate Profitability
Source: BEA, Bloomberg, Standard & Poors, Baird analysis. Past performance is not a guarantee of future results.
Corporate Profitability
Earnings power ultimately
drives long-term changes to
stock prices. These two
charts display how profitable
US corporations are. The
top chart measures earnings
(top line growth) and
revenue (bottom line growth)
of the companies within the
S&P 500 Index. The bottom
chart displays corporate
profitability (after taxes) in
terms of total US GDP
growth.
S&P 500 Earnings Per Share (EPS)
$0
$20
$40
$60
$80
$100
$120
$0
$200
$400
$600
$800
$1,000
$1,200
Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
Earnings Per Sh (right axis)
Revenues Per Sh (left axis)
Corporate Profits (% of GDP)
3%
6%
9%
12%
Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16
Co
rpo
rate
Pro
fits
/G
DP
As of September 30, 2016
Robert W. Baird & Co. Member SIPC.
Market Volatility
Source: Standard & Poor’s; CBOE; Baird Analysis.
VIX (CBOE
Volatility Index)
The VIX measures the
implied volatility of S&P 500
future options. Simply put, it
measures the expected
volatility of the S&P 500
Index over the next 30 days.
The higher the index, the
higher the expected volatility.
It is also commonly referred
to as the “fear index.”
Historic VIX Level
Quarterly S&P 500 Trading Volatility
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
VIX
Le
ve
l
0%
20%
40%
60%
80%
Q4
20
06
Q1
20
07
Q2
20
07
Q3 2
00
7
Q4
20
07
Q1
20
08
Q2
20
08
Q3 2
00
8
Q4
20
08
Q1
20
09
Q2
20
09
Q3 2
00
9
Q4
20
09
Q1
20
10
Q2
20
10
Q3 2
01
0
Q4 2
01
0
Q1
20
11
Q2
20
11
Q3
20
11
Q4 2
01
1
Q1
20
12
Q2
20
12
Q3
20
12
Q4 2
01
2
Q1
20
13
Q2
20
13
Q3
20
13
Q4 2
01
3
Q1
20
14
Q2
20
14
Q3
20
14
Q4 2
01
4
Q1 2
01
5
Q2
20
15
Q3
20
15
Q4
20
15
Q1 2
01
6
Q2
20
16
Q3
20
16
Q4
20
16
Pe
rce
nt
of T
rad
ing
Da
ys
% of days up/down 2% or more
% of days up/down 1-2%
As of December 31, 2016
Robert W. Baird & Co. Member SIPC.
Commodity Markets
As of December 31, 2016
Source: U.S. Dept of Energy; London PM Gold Fix Index; Baird Analysis. “Broad Market” is represented by the Bloomberg Commodity Index, specific commodity types are reported segments of that index. See important disclosures and definitions included with this publication.
Year-to-Date Returns of Various Commodity Types (%)
Oil Prices
$53.72
$0
$20
$40
$60
$80
$100
$120
$140
$160
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
WTI
Oil
Pri
ce ($/b
)
Gold Prices
11.8
16.3
7.1 6.5
10.3
19.9
15.7
9.7 9.57.8
14.0
2.1
-9.8
-24.1
14.8
-5.6
-30
-20
-10
0
10
20
30
$1,146
$-
$500
$1,000
$1,500
$2,000
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Lo
nd
on
PM
Go
ld ($
/oz)
Robert W. Baird & Co. Member SIPC.
Energy Markets
As of December 31, 2016
Source: U.S. Energy Information Administration; Bloomberg; Baird Analysis.
Total U.S. Oil Production (LH) and Rig Count Index (RH) Global Oil Supply and Demand (LH) and Supply Imbalance (RH)
$53.72
$0
$20
$40
$60
$80
$100
$120
$140
$160
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
WTI
Oil
Pri
ce ($/b
)
0
500
1,000
1,500
2,000
2,500
3,500
4,500
5,500
6,500
7,500
8,500
9,500
10,500
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
Ba
ke
r H
ug
he
s O
il &
Ga
s R
ig C
ou
nt
To
tal
U.S
. O
il P
rod
uc
tio
n (m
mb
b/d
)
Total Oil Production
Total Active Rig Count
Oil Prices (West Texas Intermediate)
-4
-3
-2
-1
0
1
2
3
4
75
80
85
90
95
100
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
Su
pp
ly / D
em
an
d Im
bala
nces (
MM
bb
/d)
Glo
bal
Oil
Su
pp
ly a
nd
Dem
an
d (
MM
bb
/d)
Global Over/Under Supply
Global Oil Supply
Global Oil Demand
Un
ders
up
ply
O
vers
up
ply
Natural Gas Prices (Henry Hub)
$3.72
$0
$2
$4
$6
$8
$10
$12
$14
$16
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Hen
ry H
ub
Natu
ral G
as P
rice
($/m
mb
tu)
Robert W. Baird & Co. Member SIPC.
Mutual Fund and ETF Flows
Source: Morningstar Direct; Baird Analysis. Asset classes with less than $25 billion invested were excluded from the analysis.
Annual Fund Flows
The examination of annual
mutual fund and ETF flows
shows the investment
pattern of the average
investor by broad asset
class. For example, in 2008
investors exited stocks when
the markets fell. In 2009,
large amounts of capital
went to fixed income, but
little flowed back to stocks.
Annual Mutual Fund and ETF Flows ($ millions)
As of November 30, 2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD
Money Market 223,830 340,833 613,001 (290,490) (431,604) (60,745) 23,827 40,622 24,080 52,648 74,458
Municipal Bond 18,502 14,353 12,758 75,969 16,043 (8,574) 54,251 (56,361) 32,748 21,822 47,605
Taxable Bond 55,311 112,649 61,001 333,826 246,664 190,178 329,181 34,920 110,193 29,820 183,970
Allocation 28,899 45,974 (21,999) 6,453 18,527 19,307 29,553 61,961 51,267 (20,669) (43,465)
US Equity 48,344 37,163 709 (33,563) (21,054) (45,395) (41,163) 175,444 127,309 (60,053) (37,718)
International Equity 162,568 174,946 (41,542) 63,246 91,729 19,051 61,056 200,740 153,487 209,444 6,264
Alternative 10,147 11,561 19,820 28,434 24,006 23,172 17,902 49,512 20,076 20,516 3,601
Commodities 8,648 6,542 12,370 36,636 24,972 8,171 11,928 (32,890) (3,317) (1,526) 17,576
Calendar Year Net Flows ($M)
Top 10 In-Flows Trailing 1-Year Top 10 Out-Flows Trailing 1-Year
(as a % of assets) Growth Rate (as a % of assets) Growth Rate
Money Market - Taxable 71.0% Prime Money Market -60.5%
Equity Precious Metals 43.9% Money Market - Tax-Free -32.3%
Managed Futures 40.5% Europe Stock -29.3%
Commodities Precious Metals 34.3% Japan Stock -24.9%
Preferred Stock 29.0% Nontraditional Bond -19.7%
Corporate Bond 21.1% Long-Short Equity -16.1%
Muni California Intermediate 15.4% World Allocation -11.6%
Muni National Interm 15.3% Health -10.2%
Emerging Markets Bond 15.0% Miscellaneous Region -8.8%
Energy Limited Partnership 14.1% Mid-Cap Grow th -7.8%
Biggest % Gainers/Losers by Asset Class
Robert W. Baird & Co. Member SIPC.
Fund Flow Heat Map
Source: Morningstar Direct; Baird Analysis.
As of November 30, 2016
Asset Class 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD
US Equity
Large Cap Grow th -1.0% 0.0% -1.2% -2.3% -4.2% -3.1% -3.9% -1.6% -1.8% -1.1% -6.9%
Large Cap Blend 1.2% 2.6% 4.9% -0.9% -0.3% 0.7% 1.8% 6.5% 6.9% -0.5% 2.9%
Large Cap Value 3.9% -0.3% -2.9% -5.2% -0.1% 0.0% 0.5% 5.4% 2.8% -2.6% 1.1%
Mid Cap Grow th 0.4% 5.7% -5.6% -0.5% 0.5% -4.8% -4.3% 2.2% -3.6% -2.2% -7.9%
Mid Cap Blend 4.3% 2.1% -3.7% 4.9% 3.6% -1.4% 2.5% 15.0% 6.2% 5.5% 0.1%
Mid Cap Value 1.8% 1.2% -4.9% -1.4% 0.8% -1.0% -4.8% 8.6% 0.5% -3.8% -2.1%
Small Cap Grow th -1.4% -2.0% -2.1% 4.4% 0.0% -1.0% -3.8% 4.4% -7.4% -3.1% -6.2%
Small Cap Blend 8.6% -2.8% 1.9% 4.6% 3.4% -3.6% -3.0% 10.0% 2.1% 0.5% 4.0%
Small Cap Value 6.2% -2.3% 7.2% 4.2% 7.6% -3.4% -4.6% 4.4% -0.5% -0.1% 4.5%
International Equity
Internationl Grow th 16.3% 9.3% -2.9% 3.3% 0.3% -2.7% -2.1% 4.4% -0.7% 3.7% -1.9%
International Blend 24.7% 19.9% 0.4% 6.9% 10.5% 5.2% 4.1% 17.8% 15.3% 21.1% 7.0%
International Value 11.8% 10.0% -7.0% -5.2% 4.4% 5.6% 7.5% 10.2% 9.5% 1.0% 0.5%
Emerging Markets 18.1% 19.5% 3.6% 32.6% 27.5% 7.4% 19.2% 9.4% 3.5% -0.3% 5.7%
Global Equity 12.3% 8.8% -4.8% -5.3% -4.2% -5.4% -6.2% 5.2% 2.5% -0.3% -3.8%
Fixed Income
Short-Term Bond -4.9% 2.4% 0.3% 70.3% 28.7% 7.8% 19.2% 12.5% 6.5% -0.8% 4.9%
Intermediate-Term Bond 11.6% 16.1% 2.3% 26.7% 9.8% 5.2% 12.8% -7.5% 4.8% 4.4% 10.0%
High Yield Bond 3.3% 2.7% 3.5% 28.3% 11.3% 12.0% 15.7% 2.0% -5.4% -3.6% 3.6%
Bank Loan 29.5% -7.9% -26.9% 38.3% 78.0% 32.6% 24.0% 93.4% -14.3% -16.5% 2.1%
TIPS -3.1% 6.7% 39.0% 55.5% 10.9% 11.6% 6.1% -23.9% -2.2% 3.8% 11.2%
Short-Term Muni -5.6% 4.6% 27.4% 105.5% 10.2% 4.0% 11.7% 2.2% 7.4% -2.0% 5.5%
Intermediate-Term Muni 7.4% 8.8% 9.7% 22.9% 7.1% 2.0% 14.4% -9.5% 13.4% 12.2% 12.6%
High Yield Muni 25.5% 1.3% -5.7% 27.6% 5.0% -1.5% 22.6% -15.0% 17.1% 5.2% 7.9%
>10% 5% to 10% 3% to 5% 3% to 0% 0% to -3% -3% to -5% -5% to -10% <-10%
Mutual Fund and ETF Net Flow (YoY % Growth)
Domestic Equity
Q4 2016 Market ChartBook
Robert W. Baird & Co. Member SIPC.
U.S. Stock Market Snapshot
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of December 31, 2016
Representative
Last Qtr YTD 1-Year 3-Year 5-Year 10-Year Std. Dev. Max. Loss P/E EPS Gr. Div. Yld. Benchmark
2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 16.0 12.0
Bellwethers
S&P 500 3.8 12.0 12.0 8.9 14.7 7.0 11.1 (8.4) 19.4 5.6 2.3 S&P 500
DJIA 8.7 16.5 16.5 8.7 12.9 7.5 11.0 (9.0) 18.7 (3.7) 2.6 Dow Jones Industrial Avg.
Market Cap
Mega 3.5 10.4 10.4 8.8 14.0 6.3 11.2 (8.5) 18.2 2.7 2.2 Russell Top 50
Large 4.1 11.3 11.3 8.9 14.7 6.8 11.1 (8.6) 19.0 5.3 2.1 Russell Top 200
Mid 3.2 13.8 13.8 7.9 14.7 7.9 12.2 (12.8) 20.7 5.9 1.9 Russell Midcap
Small 8.8 21.3 21.3 6.7 14.5 7.1 15.0 (16.8) 21.7 4.4 1.5 Russell 2000
Micro 10.1 20.4 20.4 5.8 15.6 5.5 15.8 (21.0) 19.1 (2.1) 1.2 Russell Micro Cap
Style
Value 7.2 18.4 18.4 8.6 14.8 5.8 11.5 (10.4) 18.0 2.8 2.5 Russell 3000 Value
Core 4.2 12.7 12.7 8.4 14.7 7.1 11.4 (8.8) 19.6 5.4 2.0 Russell 3000
Grow th 1.2 7.4 7.4 8.3 14.4 8.3 11.8 (8.8) 21.5 9.7 1.5 Russell 3000 Growth
S&P 500 Sectors
Consumer Discretionary 2.3 6.0 6.0 8.6 17.8 9.6 12.9 (8.0) 19.0 11.8 1.6 S&P 500/Cons. Disc.
Consumer Staples (2.0) 5.4 5.4 9.2 12.7 10.1 10.0 (7.5) 20.1 4.6 2.9 S&P 500/Cons. Staples
Energy 7.3 27.4 27.4 (2.5) 3.9 4.3 17.9 (38.7) 29.7 (11.3) 3.5 S&P 500/Energy
Financials 21.1 22.8 22.8 11.7 19.5 (0.4) 14.9 (15.2) 14.2 12.1 1.9 S&P 500/Financials
Health Care (4.0) (2.7) (2.7) 9.2 16.8 9.6 11.6 (13.1) 17.6 8.2 1.8 S&P 500/Health Care
Industrials 7.2 18.9 18.9 8.4 15.6 7.8 12.7 (11.3) 18.5 3.5 2.3 S&P 500/Industrials
Information Technology 1.2 13.9 13.9 13.2 16.4 9.9 14.6 (9.4) 19.5 9.4 1.7 S&P 500/Info. Tech.
Materials 4.7 16.7 16.7 4.6 10.5 6.1 17.2 (22.7) 17.3 5.2 2.4 S&P 500/Materials
Telecomm 4.8 23.5 23.5 9.6 11.6 6.4 13.3 (12.6) 15.4 45.0 4.8 S&P 500/Telecomm
Utilities 0.1 16.3 16.3 12.6 10.4 7.0 13.2 (12.8) 16.7 5.9 4.4 S&P 500/Utilities
Trailing Returns (%) 5-Year Risk Stats Other Metrics
Robert W. Baird & Co. Member SIPC.
Domestic Asset Class Performance
Source: Morningstar Direct. Asset classes are represented by the following benchmarks: S&P 500 (Large Cap), Russell Midcap® (Mid Cap), Russell 2000® (Small Cap), Russell 1000 Value® (Large Value), Russell 1000 Growth® (Large Growth), Russell Midcap Value® (Mid Value), Russell Midcap Growth® (Mid Growth), Russell 2000 Value® (Small Value), and Russell 2000 Growth® (Small Growth). See important disclosures and definitions included with this publication.
As of December 31, 2016
Performance by Market Cap and Style
3.83.2
8.8
6.7
1.0
5.5
0.5
14.1
3.6
12.0
13.8
21.3
17.3
7.1
20.0
7.3
31.7
11.3
0
4
8
12
16
20
24
28
32
36
Large Cap Mid Cap Small Cap LargeValue
LargeGrowth
MidValue
MidGrowth
SmallValue
SmallGrowth
Re
turn
(%
)
Last Quarter Year-to-Date
Robert W. Baird & Co. Member SIPC.
-2.7
5.4
6.0
12.0
13.9
16.3
16.7
18.9
22.8
23.5
27.4
-5 0 5 10 15 20 25 30
Health Care
Cons. Staples
Cons. Disc.
S&P 500
Info. Tech.
Utilities
Materials
Industrials
Financials
Telecomm
Energy
Return (%)
-4.0
-2.0
0.1
1.2
2.3
3.8
4.7
4.8
7.2
7.3
21.1
-10 -5 0 5 10 15 20 25
Health Care
Cons. Staples
Utilities
Info. Tech.
Cons. Disc.
S&P 500
Materials
Telecomm
Industrials
Energy
Financials
Return (%)
Domestic Asset Class Performance
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of December 31, 2016
S&P 500 Index: Performance by Sector (Latest Quarter)
S&P 500 Index: Performance by Sector (YTD)
P/E Ratio
(TTM)
P/E Ratio
(NTM)
Dividend
Yield (%)
EPS Growth
(%)
S&P 500 Index 19.9 19.4 2.3 8.6
Consumer Discretionary 19.7 20.0 1.6 11.9
Consumer Staples 22.6 20.6 2.9 8.1
Energy 0.0 42.4 3.5 8.1
Financials 15.6 15.2 1.9 7.0
Health Care 21.1 19.3 1.8 9.7
Industrials 20.9 19.5 2.3 9.2
Info. Tech. 20.7 19.9 1.7 9.8
Materials 20.8 20.4 2.4 7.0
Telecomm 14.5 17.2 4.8 3.6
Utilities 20.3 16.5 4.4 5.1
S&P 500 Sector Statistics
Robert W. Baird & Co. Member SIPC.
Investment Style Leadership
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of December 31, 2016
Large Cap vs. Small Cap (Rolling 12-Month Periods)
-20
-15
-10
-5
0
5
10
15
20
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
12-M
o P
erf
orm
an
ce
Dif
fere
nti
al
(%)
Large Cap Outperforms
Small Cap Outperforms
Value vs. Growth (Rolling 12-Month Periods)
-20
-15
-10
-5
0
5
10
15
20
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
12
-Mo
Pe
rfo
rma
nc
e D
iffe
ren
tia
l (%
)
Defensive vs. Cyclical (Rolling 12-Month Periods)
-40
-30
-20
-10
0
10
20
30
40
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
12
-Mo
Perf
orm
an
ce D
iffe
ren
tial (%
)
Value Outperforms
Growth Outperforms
Defensive Outperforms
Cyclical Outperforms
Robert W. Baird & Co. Member SIPC.
19.9
5
10
15
20
25
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
P/E
Rati
o (TT
M)
S&P 500 P/E 10-Year Average P/E
Average +1 Std. Dev. Average -1 Std. Dev.
21.2
5
10
15
20
25
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
P/E
Ra
tio
(T
TM
)
Mid Cap 10-Year Average P/E
Average +1 Std. Dev. Average -1 Std. Dev.
20.2
5
10
15
20
25
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
P/E
Rati
o (
TT
M)
Small Cap 10-Year Average P/E
Average +1 Std. Dev. Average -1 Std. Dev.
Historical Market Cap Valuations
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of December 31, 2016
S&P 500 Valuation History
Mid Cap Valuations History Small Cap Valuation History
Robert W. Baird & Co. Member SIPC.
Historical Sector Valuation and Growth Ranges
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of December 31, 2016
S&P 500 Sectors: 10-Year P/E Valuation Range
S&P 500 Sectors: 10-Year Earnings Growth Range
20.0 20.6
42.4
15.2
19.3 19.4 19.9 20.4
17.2 16.5
0
5
10
15
20
25
30
35
40
45
50
Cons. Disc. Cons. Staples Energy Financials Health Care Industrials Info Tech Materials Telecomm Utilities
P/E
Ra
tio
10-Year Low
10-Year High
Current
Average
LEGEND
11.9
8.1 8.1
7.0
9.79.2
9.8
7.0
3.6
5.1
0
2
4
6
8
10
12
14
16
18
Cons. Disc. Cons. Staples Energy Financials Health Care Industrials Info Tech Materia ls Telecomm Utilities
LT
Ea
rnin
gs
Gro
wth
Robert W. Baird & Co. Member SIPC.
Mutual Fund Over/Under Performance (Equity Funds)
Mutual Fund Style Universe: Style-specific universe of mutual funds as categorized by Morningstar. Number of funds in each category as of November 2016: 338 for Large Growth, 259 for Large Value, 177 for Mid Growth, 91 for Mid Value, 182 for Small Growth, 82 for Small Value, and 124 for International. Source: Morningstar Direct; S&P 500 and Russell benchmarks; Baird Analysis. See important disclosures and definitions included with this publication.
Mutual Fund
Performance
Active investment managers
often have a primary
objective of outperforming a
relevant market benchmark
based on the fund’s
investment style. In certain
periods, active managers
can find it easier or more
difficult to outperform.
This chart examines seven
main assets classes,
detailing what percentage of
mutual fund managers over-
or under-performed in a
given period. This provides
useful context when
assessing mutual funds that
you may own.
Percent of Funds Outperforming Market Benchmarks (Trailing 1 Year)
As of November 30, 2016
20% 25%38%
45% 50%
12%
48%
0%
25%
50%
75%
100%
Large Growth Large Value Mid Growth Mid Value Small Growth Small Value Int'l
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
Percent of Funds Outperforming Market Benchmarks (Trailing 5 Years)
20% 16%23%
13%
43% 38% 37%
0%
25%
50%
75%
100%
Large Growth Large Value Mid Growth Mid Value Small Growth Small Value Int'l
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
International Equity
Q4 2016 Market ChartBook
Robert W. Baird & Co. Member SIPC.
Global Market Performance
Source: Standards & Poor’s (S&P 500); MSCI benchmarks (country returns). All performance is measured in USD. See important disclosures and definitions included with this publication.
As of December 31, 2016
Year-to-Date Performance
S&P 500
12.0%
Canada
25.5%
Mexico
--9.0%
UK
-0.0%
France
6.0%
Spain
-0.5%
Germany
3.5%
Brazil
66.8%
Japan
2.7%
Hong Kong
2.3%
China
1.1%
India
-1.4%
Australia
11.7%
South Africa
18.4%
Europe
0.2% Russia
55.9%
Robert W. Baird & Co. Member SIPC.
International Equity Snapshot
Source: Morningstar Direct; MSCI benchmarks. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of December 31, 2016
Asset Class/Region Last Qtr YTD 1-Year 3-Year 5-Year 10-Year 2015 2014 2013 Benchmark
Broad Developed Markets
Developed Markets (USD) (0.7) 1.0 1.0 (1.6) 6.5 0.8 1.0 (0.8) (4.9) MSCI EAFE (Net) USD
Developed Markets (Local Currency) 7.1 5.3 5.3 5.5 11.8 2.2 5.3 5.3 5.9 MSCI EAFE (Net) Local
Currency Effect (USD - Local Returns) (7.8) (4.3) (4.3) (7.1) (5.3) (1.5) (4.3) (6.1) (10.8)
Broad Emerging Markets
Emerging Markets (4.2) 11.2 11.2 (2.6) 1.3 1.8 11.2 (14.9) (2.2) MSCI Emerging Markets (Net)
BRIC (3.8) 12.4 12.4 (1.7) 1.1 1.2 12.4 (13.3) (2.6) MSCI BRIC
Returns by Style
Value 4.2 5.0 5.0 (2.1) 6.3 (0.2) 5.0 (5.7) (5.4) MSCI EAFE Value
Grow th (5.5) (3.0) (3.0) (1.2) 6.7 1.6 (3.0) 4.1 (4.4) MSCI EAFE Growth
Large Cap (0.2) 1.1 1.1 (2.2) 6.1 0.6 1.1 (2.1) (5.5) MSCI EAFE Large Cap
Mid Cap (2.5) 0.7 0.7 1.0 8.6 1.4 0.7 4.4 (2.1) MSCI EAFE Mid Cap
Small Cap (2.9) 2.2 2.2 2.1 10.6 3.0 2.2 9.6 (5.0) MSCI EAFE Small Cap
Returns by Region
Europe (0.4) 0.2 0.2 (2.6) 6.9 1.0 0.2 (2.3) (5.7) MSCI Europe
Japan (0.1) 2.7 2.7 2.8 8.5 0.7 2.7 9.9 (3.7) MSCI Japan
Pacif ic (ex Japan) (2.7) 8.0 8.0 (0.5) 5.4 4.2 8.0 (8.4) (0.3) MSCI Pacific ex Japan
Trailing Returns (%) Annual Returns (%)
Robert W. Baird & Co. Member SIPC.
International Country Performance
Source: Morningstar Direct.; MSCI Indices; Baird Analysis. All returns are reported in USD. MSCI EAFE (Developed markets) and MSCI EM (Emerging markets) are broad benchmarks representing many countries. Includes the 10 largest countries by weighting in the benchmark. See important disclosures and definitions included with this publication.
As of December 31, 2016
Selected Country Performance (Latest Quarter) Selected Country Performance (Year to Date)
-8.4
-8.0
-7.8
-7.7
-7.1
-5.3
-4.2
-4.0
-2.2
2.2
18.7
-3.9
-2.1
-0.9
-0.8
-0.7
-0.1
0.8
1.5
2.3
3.1
10.8
-15 -10 -5 0 5 10 15 20
Malaysia
India
Mexico
Indonesia
China
South Korea
MSCI Em. Mkts
South Africa
Taiwan
Brazil
Russia
Switzerland
Netherlands
U.K.
Sweden
MSCI EAFE
Japan
Australia
Germany
Spain
France
Italy
Return (%)
Em
erg
ing
Mark
ets
D
ev
elo
ped
Mark
ets
-9.0
-3.9
-1.4
1.1
9.3
11.2
17.5
18.4
19.6
55.9
66.8
-9.5
-4.0
-0.5
0.0
1.0
1.9
2.7
3.5
5.3
6.0
11.7
-20 0 20 40 60 80
Mexico
Malaysia
India
China
South Korea
MSCI Em. Mkts
Indonesia
South Africa
Taiwan
Russia
Brazil
Italy
Switzerland
Spain
U.K.
MSCI EAFE
Sweden
Japan
Germany
Netherlands
France
Australia
Return (%)
Robert W. Baird & Co. Member SIPC.
Financials25.8
Cons. Disc.11.7
Industrials11.5Cons. Staples
11.3
Health Care9.1
Info. Tech.8.4
Materials7.0
Energy6.5
Telecomm5.3
Utilities3.5
-10.1
-8.1
-7.2
-6.7
-5.0
-2.2
-1.3
-0.9
2.6
6.8
8.3
-15 -10 -5 0 5 10
Cons. Staples
Health Care
Utilities
Telecomm
Info. Tech.
Industrials
MSCI ACWI ex US
Cons. Disc.
Materials
Financials
Energy
Return (%)
-13.1
-4.1
-3.3
-1.9
-0.6
4.5
6.2
6.3
10.7
27.6
31.3
-20 -15 -10 -5 0 5 10 15 20 25 30 35
Health Care
Telecomm
Utilities
Cons. Staples
Cons. Disc.
MSCI ACWI Ex US
Financials
Industrials
Info. Tech.
Materials
Energy
Return (%)
International Economic Sector Performance
Source: Morningstar Direct; Baird Analysis. Sectors based on global industry classification standards (GICS). The MSCI ACWI Ex US Index is a benchmark designed to measure developed market and emerging market performance excluding the U.S. See important disclosures in appendix.
As of December 31, 2016
MSCWI ACWI Ex U.S. Performance by Sector (Latest Quarter)
Sector Weighting (%) of the MSCI ACWI Ex U.S. Index
MSCWI ACWI Ex U.S. Performance by Sector (Year to Date)
Robert W. Baird & Co. Member SIPC.
-15
-10
-5
0
5
10
15
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
12
-Mo
Perf
orm
an
ce D
iffe
ren
tia
l (%
)
-50
-40
-30
-20
-10
0
10
20
30
40
50
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
12-M
o P
erf
orm
an
ce
Dif
fere
nti
al
(%)
-30
-20
-10
0
10
20
30
Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16
12-M
o P
erf
orm
an
ce
Dif
fere
nti
al
(%)
Investment Style Leadership
Source: Morningstar Direct. Returns based on 12-month performance, calculated monthly over the most recent 10-year period. Benchmark proxies are as follows: S&P 500 (U.S.), MSCI EAFE (Int’l), MSCI EAFE Value (Value) and MSCI EAFE Growth (Growth), MSCI EAFE (Developed markets), and MSCI EM (Emerging markets). See important disclosures and definitions included with this publication.
As of December 31, 2016
U.S. vs. International (Rolling 12-Month Periods)
U.S. Outperforms
Int’l Outperforms
Developed vs. Emerging Markets (Rolling 12-Month Periods) Value vs. Growth (Rolling 12-Month Periods)
Developed Outperforms
Emg. Markets Outperforms
Value Outperforms
Growth Outperforms
Robert W. Baird & Co. Member SIPC.
19.9
16.3
14.0
4
6
8
10
12
14
16
18
20
22
Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
P/E
Ra
tio
(T
TM
)
S&P 500 MSCI EAFE MSCI EM
Global Stock Market Valuations
Source: Standards & Poor’s (S&P 500); MSCI benchmarks (country returns). All performance is measured in USD. US is measured by the S&P 500 Index, Developed International is measured by the MSCI EAFE Index, Emerging International is measured by the MSCI EM Index. P/E ratios are based on trailing 12 month earnings. See important disclosures and definitions included with this publication.
As of December 31, 2016
Historical P/E Ratio
Current P/E Ratio of Selected Countries
17.1
15.0
19.9
14.313.1
15.416.3
15.7
13.7
11.1 10.8
15.614.5
18.919.9
7.7
0
2
4
6
8
10
12
14
16
18
20
22
24
UK France Switzerland Germany Spain Japan Australia Hong Kong Singapore China S. Korea Brazil S. Africa India Mexico Russia
P/E
Ra
tio
(T
TM
)
Europe Asia-Pacific Emerging-Markets
Robert W. Baird & Co. Member SIPC.
19.4
14.3
17.1
19.9
15.0 14.3
17.3
13.1
18.5
11.5
17.5
27.4
15.416.3 15.7
13.7
0
5
10
15
20
25
30
35
P/E
Ra
tio
Country Valuation Ranges
Source: Morningstar Direct. USA is represented by the S&P 500. All other countries are represented by the respective MSCI country benchmark. P/E ratios are based on trailing 12 month earnings. See important disclosures and definitions included with this publication.
As of December 31, 2016
Developed Markets: 7-Year P/E Valuation Ranges
Emerging Markets: 7-Year P/E Valuation Ranges
7-Year Low
7-Year High
Current
Average
LEGEND
11.1 10.8
14.0
18.9
7.7
16.4 17.1
14.615.6
19.9
17.4
11.9
14.5
0
5
10
15
20
25
30
35
P/E
Ra
tio
Fixed Income
Q4 2016 Market ChartBook
Robert W. Baird & Co. Member SIPC.
Bond Market Snapshot
Source: Morningstar Direct; Barclays benchmarks. Individual security types are subsets of either the Barclays U.S. Aggregate or Municipal Bond benchmarks. Duration, measured in years, is a relative term that expresses the price sensitivity of an investment/benchmark to changes in interest rates. All else equal, the lower the duration, the less price sensitivity to interest rate changes. See important disclosures and definitions included with this publication.
As of December 31, 2016
Bond Types Yield (%) Duration Last Qtr YTD 1-Year 3-Year 5-Year 10-Year 2015 2014 2013 Benchmark
Broad Developed Markets
U.S. Taxable Bonds 2.6 5.9 (3.0) 2.7 2.7 3.0 2.2 4.3 2.7 0.6 6.0 BBgBarc US Aggregate Bond
U.S. Municipal Bonds 2.7 6.2 (3.6) 0.3 0.3 4.1 3.3 4.3 0.3 3.3 9.1 BBgBarc Municipal Bond
International Bonds 1.6 6.9 (10.3) 1.5 1.5 (2.6) (1.4) 2.4 1.5 (6.0) (3.1) BBgBarc Glbl Agg. Bond ex US
Broad Emerging Markets
Emerging Market Bonds 5.0 5.6 (2.6) 9.9 9.9 5.3 5.7 6.7 9.9 1.3 4.8 BBgBarc Emerging Markets
Taxable Bond Categories
Treasuries 1.9 6.1 (3.8) 1.0 1.0 2.3 1.2 4.0 1.0 0.8 5.1 BBgBarc US Treasury
Agencies 1.8 3.8 (3.7) 1.1 1.1 2.3 1.2 3.9 1.1 0.9 4.9 BBgBarc US Government
Mortgage-Backed 2.9 4.6 (2.0) 1.7 1.7 3.1 2.1 4.3 1.7 1.5 6.1 BBgBarc US MBS
Inv-Grade Corporate 3.4 7.3 (2.8) 6.1 6.1 4.2 4.1 5.5 6.1 (0.7) 7.5 BBgBarc US Corporate IG
High Yield Corporate 6.1 4.1 1.9 17.5 17.5 4.7 7.4 7.3 17.5 (4.6) 2.5 BofA/ML High Yield Master II
Municipal Bond Categories
Insured 2.7 5.8 (2.4) 0.7 0.7 4.6 3.7 4.4 0.7 2.9 10.3 BBgBarc Municipal Insured
State GO 2.4 5.6 (3.4) (0.4) (0.4) 3.3 2.5 4.1 (0.4) 3.0 7.3 BBgBarc Municipal State GO
Local GO 2.7 6.7 (4.1) (0.1) (0.1) 3.8 3.0 4.4 (0.1) 3.2 8.5 BBgBarc Municipal Local GO
Revenue 2.9 6.8 (3.9) 0.4 0.4 4.6 3.7 4.3 0.4 3.6 10.1 BBgBarc Municipal Revenue
High Yield 6.4 10.2 (5.8) 3.0 3.0 6.1 5.9 4.0 3.0 1.8 13.8 BBgBarc High Yield Muni
Annual Returns (%)Trailing Returns (%)Characteristics
Robert W. Baird & Co. Member SIPC.
-0.4
-2.6
-7.8
-4.7-3.0 -3.1 -2.6
1.91.3 1.9
6.7
3.2 3.8 4.4
8.1
17.5
-12
-8
-4
0
4
8
12
16
20
Short-Term Intermediate Long-Term AAA AA A Baa Below Baa(High Yield)
Re
turn
(%
)
QTR YTD
-0.5
-3.7-4.3
-3.1 -3.3-3.8
-4.6
-5.8
0.2
-0.5-0.1
0.0 0.2
1.10.7
3.0
-8
-6
-4
-2
0
2
4
Short-Term Intermediate Long-Term AAA AA A Baa Below Baa(High Yield)
Re
turn
(%
)
QTR YTD
Performance by Maturity and Credit Quality
Source: Bloomberg; Baird Analysis. Ratings are as defined by Bloomberg and represent bonds in the Barclays Aggregate Bond index (taxable bonds) and Barclays Municipal Index (municipal bonds). Short-term maturity is defined as 1-3 years, intermediate is 5-7 years for taxable and 6-8 for municipal, long-term is 10+ years for taxable and 8-12 years for municipal. See important disclosures and definitions included with this publication.
As of December 31, 2016
Taxable Bonds
Municipal Bonds
Robert W. Baird & Co. Member SIPC.
Yield and Volatility Characteristics of Various Bond Types
Source: Morningstar Direct; Barclays benchmarks. Individual security types are subsets of either the Barclays U.S. Aggregate or Municipal Bond benchmarks. Bond types are represented by the following indices: Barclays Aggregate Bond (Broad Bond Market), Barclays US MBS (Mortgage-Backed), Merrill Lynch High Yield Master II (High Yield), Barclays IG Corporate (Corporate), Barclays Municipal (Municipal), Barclays US Treasury (U.S. Treasury), Barclays Global Aggregate ex USD (International), and S&P/LSTA Leveraged Loan (Bank Loans). Indices are unmanaged and are used to measure and report performance of various sectors of the market. Past performance is no guarantee of future results and diversification does not ensure against loss. Direct investment in indices is not available. See important disclosures and definitions included with this publication.
As of December 31, 2016
The Relationship Between Yield and Volatility
International
Bank Loans
Emerging Mkts
Broad Bond Market
High Yield
Treasury
Mortgage-BackedCorporate
Municipal
HY Municipal
0
2
4
6
8
0 2 4 6 8 10 12
Yie
ld (%
)
10-Year Historical Volatility (Standard Deviation)
Robert W. Baird & Co. Member SIPC.
U.S. Treasury Bonds
As of December 31, 2016
Source: U.S. Department of Treasury; Baird Analysis. See important disclosures and definitions included with this publication.
U.S. Treasury Yield Curve Historical U.S. Treasury Rates
1
2
3
4
5
6
7
8
9
10
10-Y
ear
U.S
. T
reas
ury
Rate
(%
)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Yie
ld (
%)
Maturity
12/31/16 Current Qtr
12/31/15 Last Year
10yr
20yr
6m
o
2yr
3yr
5yr
30 y
rCurrent U.S. Treasury Yields by Maturity
0.510.62
1.20
1.47
1.93
2.45
3.06
0
1
2
3
4
3 mo 6 mo 2 yr 3 yr 5 yr 10 yr 30 yr
Yie
ld (
%)
Robert W. Baird & Co. Member SIPC.
0.30.5
0.60.8
0.9
1.1
1.41.6
2.0
2.3
0.7 0.7 0.7 0.8 0.91.1
1.2
1.5
2.12.3
1.1 1.1 1.21.3
1.5
1.7
2.0
2.5
3.5
3.8
0
1
2
3
4
5
3mo 6mo 1yr 2yr 3yr 5yr 7yr 10yr 20yr 30yr
Yie
ld (
%)
Treasury
Municipal
Tax-Equivalent Yield
U.S. Treasury Bonds
As of December 31, 2016
Source: U.S. Department of Treasury; Bloomberg. Municipal yields are based on the Barclays AAA GO Bond Index. The Tax-Equivalent Yields assumes a 39.6% federal tax rate and full exemption of those taxes. See important disclosures and definitions included with this publication.
U.S. Municipal and Treasury Yield Curve
Yield Comparisons of Treasury and Municipal Bonds
0.0
0.5
1.0
1.5
2.0
2.5
Yie
ld (%
)
Maturity
Treasury Municipal
20yr
3m
o6m
o
10yr
30yr
5 y
r
Robert W. Baird & Co. Member SIPC.
0
3
6
9
12
15
18
21
24
27
Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 Dec-16
Eff
ec
tiv
e Y
ield
(%
)
4.7
6.1
11.5
12.8
34.435.7
0
10
20
30
40
50
60
70
80
90
100
0
2
4
6
8
10
12
14
16
18
20
BB B CCC
Av
era
ge
De
fau
lt R
ate
(%
)
Eff
ec
tiv
e Y
ield
(%
)
3.12.8
3.1
3.8
0.0 0.62.7
6.0
0
10
20
30
40
50
60
70
80
90
100
0
1
2
3
4
5
6
7
8
9
10
AAA AA A BBB
Av
era
ge
De
fau
lt R
ate
(%
)
Eff
ec
tiv
e Y
ield
(%
)
Corporate Bond Yields
As of December 31, 2016
Source: BofA/Merrill Lynch, Standard & Poor’s. Investment Grade Bonds are represented by the BofA/ML US Corporate Bond Index; High Yield Bonds are represented by the BofA/ML High Yield Master II Index. Historic default rates provided by Standard & Poor’s and encompass the period from 1/1/81 to 12/31/15. See important disclosures and definitions included with this publication.
Investment Grade Bonds: Historical Yields Investment Grade Bonds: Current Yield and Historic Default Rate
High Yield Bonds: Historical Yields High Yield Bonds: Current Yield & Historic Default Rate
0
2
4
6
8
10
12
Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 Dec-16
Eff
ec
tiv
e Y
ield
(%
)
Robert W. Baird & Co. Member SIPC.
Bond Spreads
As of December 31, 2016
Source: Barclays, Bloomberg. The length of each bar represents the range of a particular spread relative to an appropriate Treasury benchmark over the past 10 years. The maximum and minimum spreads are capped at the 95th and 5th percentiles to account for outliers. The data point marked ‘current’ represents the most recent quarter. Past performance is not a guarantee of future results and this chart is not intended to be a valuation tool.
Average Option-Adjusted Spread: Max/Min/Avg
1314
474
130 12481
287
97
6 29
11 (100)
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
High Yield Corporate MBS Global Agencies
Sp
read
over
Tre
asu
ry B
on
d (b
ps)
High Yield Corporate MBS Global Agencies
High 1314 474 130 124 81
Average 606 187 50 63 30
Low 287 97 6 29 11
Current 409 123 15 44 21
Current/Historical Spreads (%)
Current Average
Robert W. Baird & Co. Member SIPC.
Bond Sector Yields and Returns
As of December 31, 2016
Source: Barclays, Baird Analysis. Sector yields reflect yield to worst. Change in bond price is calculated using both duration and convexity according to the following formula: New Price = (Price + (Price * -Duration * Change in Interest Rates)) + (0.5 * Price * Convexity * (Change in Interest Rates)^2). Chart is for illustrative purposes only. Past performance is not indicative of future results.
Bond Sector Avg. Maturity Avg. Yield Credit Quality YTD 1-Year Benchmark
Short-Term 2.9 yrs. 1.4% AA+ 1.0% 1.0% BBgBarc US Treasury 1-5 Yr
Intermediate-Term 7.1 2.2% AA+ 1.2% 1.2% BBgBarc US Treasury 5-10 Yr
Long-Term 13.5 2.6% AA+ 1.0% 1.0% BBgBarc US Treasury 10-20 Yr
TIPS 8.3 2.2% AA+ 4.7% 4.7% BBgBarc US Treasury US TIPS
Aggregate Bond 8.2 yrs. 2.6% AA 2.6% 2.6% BBgBarc U.S. Aggregate Bond
IG Corporates 10.7 3.4% AA+ 6.1% 6.1% BBgBarc U.S. Corporate IG
HY Corporates 6.3 6.1% B 17.1% 17.1% BBgBarc U.S. High Yield - 2% Issuer Cap
Floating Rates 2.2 1.4% A+ 1.8% 1.8% BBgBarc U.S. Floating Rate Notes
MBS 7.1 2.8% AAA 1.7% 1.7% BBgBarc U.S. Mortgage Backed Securities
ABS 2.4 1.9% AA+ 2.0% 2.0% BBgBarc Asset-Backed Securities
Municipal 12.8 2.7% AA- 0.2% 0.2% BBgBarc Municipal Bond
U.S. Treasuries
Returns
Broad Market
Sector Statistics
-2.8%
-6.3%-7.4%
-9.4%
-0.1%
-2.2%
-4.2%
-6.2% -5.7% -6.0% -6.8%
2.9%
6.8%7.9%
10.8%
0.1%
2.3%4.0% 4.5% 4.6%
6.1%7.8%
-15%
-10%
-5%
0%
5%
10%
15%
1-5 Yr Treasury 5-10 Yr
Treasury
TIPS 10-20 Yr.
Treasury
Floating Rate ABS HY Corporates MBS Municipals Total Bond
Market
IG Corporates
-1% +1%
Price Impact of a 1% Rise/Fall in Interest Rates
Robert W. Baird & Co. Member SIPC.
Mutual Fund Over/Under Performance (Bond Funds)
Mutual Fund Style Universe: Style-specific universe of mutual funds as categorized by Morningstar. Number of funds in each category as of November 2016: 103 for Short-Term Taxable, 214 Intermediate Term, 46 for Short-Term Municipal, and 70 for Intermediate Municipal. Source: Morningstar Direct; Barclays benchmarks; Baird Analysis. See important disclosures and definitions included with this publication.
Mutual Fund
Performance
Active investment managers
often have a primary
objective of outperforming a
relevant market benchmark
based on the fund’s
investment style. In certain
periods, active managers
can find it easier or more
difficult to outperform.
This chart examines four
main assets classes,
detailing what percentage of
mutual fund managers over-
or under-performed in a
given period. This provides
useful context when
assessing mutual funds that
you may own.
Percent of Funds Outperforming Market Benchmarks (Trailing 1 Year)
As of November 30, 2016
Percent of Funds Outperforming Market Benchmarks (Trailing 5 Years)
82% 85%
36%
80%
0%
25%
50%
75%
100%
Short Term Taxable Intermediate Taxable Short Term Municipal Intermediate Municipal
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
83% 88%
27%
75%
0%
25%
50%
75%
100%
Short Term Taxable Intermediate Taxable Short Term Municipal Intermediate Municipal
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
Appendix and Important Disclosures
Disclosures
Disclaimers
This is not a complete analysis of every material fact regarding any company, industry or security. The
information has been obtained from sources we consider to be reliable, but we cannot guarantee the
accuracy. Past performance is not a guarantee of future results.
Style Definitions
Large Growth: equity securities of large capitalization companies having growth stock characteristics (high
price to earnings, high return on equity and low dividend yield. Based upon the Russell 1000® Growth Index.
Large Value: equity securities of large capitalization companies having value stock characteristics (low
forecasted price-to-earnings ratio, low price-to-book ratio, high dividend yield). Based upon the Russell 1000®
Value Index. Mid Growth: equity securities of middle capitalization companies having growth stock
characteristics (high price to earnings, high return on equity and low dividend yield). Based upon the Russell
Midcap® Growth Index. Mid Value: equity securities of middle capitalization companies having growth stock
characteristics (high price to earnings, high return on equity and low dividend yield). Based upon the Russell
Midcap® Value Index. Small Growth: equity securities of small capitalization companies having growth stock
characteristics (high price to earnings, high return on equity and low dividend yield). Small capitalization stock
may be subject to additional risks including illiquidity. Based upon the Russell 2000® Growth Index. Small
Value: equity securities of small capitalization companies having value stock characteristics (low price-to-
earnings ratio, low price-to-book ratio, high dividend yield). Small capitalization stocks may be subject to
additional risks including illiquidity. Based upon the Russell 2000® Value Index. International: a free float-
adjusted market capitalization index that is designed to measure developed market equity performance,
excluding the US & Canada, consisting of 21 developed market country indices. Based upon the MSCI EAFE
Index. Satellite: these asset classes, as defined by Baird, include commodities, real estate, high yield bonds
and emerging markets. Representative benchmarks are as follows: Dow Jones UBS Commodity
(commodities), Dow Jones US REIT (real estate), BofA High Yield Master II (high yield), and MSCI Emerging
Markets (emerging markets). Short Term Taxable: Short-term bond portfolios invest primarily in corporate
and other investment-grade U.S. fixed-income issues and have durations of one to 3.5 years. Based upon the
Barclays 1-3 Year Govt/Credit Index. Intermediate Taxable: Intermediate-term bond portfolios invest
primarily in corporate and other investment-grade U.S. fixed-income issues and have durations of 3.5 to six
years. Based upon the Barclays Intermediate Gov’t/Credit Index. Short Term Municipal: Muni national short
portfolios invest in bonds issued by various state and local governments to fund public projects. These
portfolios have durations of less than 4.5 years. Based upon the Barclays 3 Year Municipal Index.
Intermediate Term Municipal: Muni national short portfolios invest in bonds issued by various state and
local governments to fund public projects. These portfolios have durations of 4.5 to 7 years. Based upon the
Barclays 7 Year Municipal Index.
GICS
The Global Industry Classification Standard ("GICS") is the exclusive property of Morgan Stanley Capital
International Inc. ("MSCI") and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") and
is licensed for use by Robert W. Baird & Co. Inc. MSCI and S&P hereby provided all information "as is" and
expressly disclaim all warranties. Without limiting any of the foregoing, in no event shall MSCI or S&P have
any liability.
Domestic Equity Benchmarks
S&P 500® Index: A representative sample of 500 leading companies in leading industries of the U.S.
economy. Considered a large-cap index.
Russell 3000® Growth Index: Measures the performance of those Russell 3000® Index companies with
higher price-to-book ratios and higher forecasted growth values. An all-cap index.
Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. This
and other information is found in the prospectus or summary prospectus. For a prospectus or summary prospectus, contact
your Baird Financial Advisor. Please read the prospectus carefully before investing.
Russell 3000® Value Index: Measures the performance of those Russell 3000® Index companies with lower
price to- book ratios and lower forecasted growth values. An all-cap index.
Russell Top 50® Index: Measures the performance of the 50 largest companies in the Russell 1000® Index,
which represents approximately 40% of the total market capitalization of the Russell 1000® Index. A mega-cap
index.
Russell Top 200® Index: Measures the performance of the 200 largest companies in the Russell 1000®
Index, which represents approximately 68% of the total market capitalization of the Russell 1000® Index. A
large-cap index.
Russell 1000® Growth Index: Measures the performance of those Russell 1000® Index companies with
higher price-to-book ratios and higher forecasted growth values. A large-cap index.
Russell 1000® Value Index: Measures the performance of those Russell 1000® Index companies with lower
price to- book ratios and lower forecasted growth values. A large-cap index.
Russell 1000® Defensive/Dynamic Index: Measures the performance of those Russell 1000® Index
companies based in terms of volatility of price and earnings, leverage and return on assets. The Russell 1000®
Defensive Index includes those with relative stability and less sensitivity to economic cycles. The Russell
1000® Dynamics Index includes those with less stability and greater sensitivity to economic cycles.
Russell Midcap® Index: Measures the performance of the 800 smallest companies of the Russell 1000®
Index, which represents approximately 36% of the total capitalization of the Russell 1000® Index. A mid-cap
index.
Russell Midcap® Growth Index: Measures the performance of those Russell Midcap® Index companies with
higher price-to-book and higher forecasted growth values. A midcap index.
Russell Midcap® Value Index: Measures the performance of those Russell Midcap companies with lower
price-to book and lower forecasted growth values. A mid-cap index.
Russell 2000® Index: Measures the performance of the 2,000 smallest companies in the Russell 3000®
Index, which represent approximately 10% of the total market capitalization of the Russell 3000® Index. A
small-cap index.
Russell 2000® Growth Index: Measures the performance of those Russell 2000® Index companies with
higher price-to-book ratios and higher forecasted growth values. A small-cap index.
Russell 2000® Value Index: Measures the performance of those Russell 2000® Index companies with lower
price-to- book ratios and lower forecasted growth values. A small-cap index.
Russell Microcap Index: Measures the performance of smallest 1000 companies in the Russell 2000® Index,
which represents less than 3% of the total market capitalization. A micro-cap index.
Dow Jones U.S. Real Estate: Measures the performance of Real Estate Investment Trusts (REIT) and other
companies that invest directly or indirectly through development, management or ownership, including
properties.
Dow Jones Industrial Average: A price-weighted index composed of 30 actively-traded large cap stocks.
Bloomberg Commodity: Aims to provide broadly diversified representation of commodity markets and
represents 20 commodities, weighted based on economic significance and market liquidity.
S&P 500® High/Low Quality Index: The S&P Quality Rankings System measures growth and stability of
earnings and dividends within the S&P 500 Index. The S&P 500 High Quality Index tracks stocks identified by
Standard & Poor’s as high quality (ranked A and above); The S&P 500 Low Quality Index tracks stocks
identified by Standard & Poor’s as low quality (ranked B and below).
The Russell Indices are a trademark of the Frank Russell Company. Russell® is a trademark of the Frank
Russell Company.
Disclosures
Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. This
and other information is found in the prospectus or summary prospectus. For a prospectus or summary prospectus, contact
your Baird Financial Advisor. Please read the prospectus carefully before investing.
MSCI International Equity Benchmarks
MSCI EAFE Index: A free float-adjusted market capitalization index that is designed to measure developed
market equity performance, excluding the US & Canada. The MSCI EAFE Index consists of 21 developed
market country indices in Europe, Australasia, and the Far East. An international index.
MSCI EAFE Large Cap: The MSCI EAFE Large Cap Index is an unmanaged, market-weighted index of large
companies in developed markets, excluding the U.S and Canada. An international large cap index.
MSCI EAFE Mid Cap: The MSCI EAFE Mid Cap Index is a free float-adjusted market capitalization index
that is designed to measure the performance of mid capitalization equities in the developed markets excluding
the US & Canada. An international mid cap index.
MSCI EAFE Small Cap: The MSCI EAFE Small Cap Index represents the small cap segment in 21
developed equity markets outside of North America. It targets 40% of the eligible small cap universe in each
country. An international small cap index.
MSCI EAFE Growth: A sub-set of the MSCI EAFE Index, this benchmark is generally considered to be
representative of the international growth stock market activity and often used as a benchmark for
international growth equity portfolios. An international growth index.
MSCI EAFE Value: A sub-set of the MSCI EAFE Index, this benchmark is generally considered to be
representative of international value stock market activity and often used as a benchmark for international
value equity portfolios. An international value index.
MSCI Europe Index: A free float-adjusted market capitalization index that is designed to measure developed
market equity performance in Europe. As of June 2006, the MSCI Europe Index consisted of the following 16
developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK. An international index.
MSCI Pacific ex Japan Index: A free float-adjusted market capitalization index designed to measure equity
market performance in the Pacific region, minus Japan. As of June 2006, the MSCI Pacific ex Japan Index
consisted of the following 5 Developed Market countries: Australia, Hong Kong, New Zealand, and Singapore.
An international index.
MSCI BRIC: A free float-adjusted market capitalization weighted index that is designed to measure the equity
market performance of the following four emerging market country indices: Brazil, Russia, India and China.
MSCI Emerging Markets Index: A free float-adjusted market capitalization index that is designed to measure
equity market performance in the global emerging markets. As of December 2003 the MSCI Emerging
Markets Index consisted of 26 emerging market country indices. An emerging markets index.
MSCI Country Indices: To construct an MSCI Country Index, every listed security in the market is identified.
Securities are free float adjusted, classified in accordance with the Global Industry Classification Standard
(GICS®), and screened by size and liquidity. MSCI then constructs its indices by targeting for index inclusion
85% of the free float adjusted market capitalization in each industry group, within each country. By targeting
85% of each industry group, the MSCI Country Index captures 85% of the total country market capitalization
while it accurately reflects the economic diversity of the market. International indices.
Fixed Income Benchmarks
Barclays Aggregate Bond Index: is an unmanaged index that tracks domestic investment-grade
bonds, including corporate, government, and mortgage-backed securities.
Barclays 1-3 Yr Government/Credit Bond Index: Includes bonds covered by the Barclays
Government/Credit Index, with maturities from 1 up to (but not including) 3 years.
Barclays Intermediate Government/Credit Bond Index: Composed of approximately 3,500 publicly
issued corporate and U.S. government debt issues rated Baa or better, with at least one year to
maturity and at least $1 million par outstanding. The index is weighted by the market value of the
issues included in the index. The Index has duration of a little over 3 years and a maturity equal to
slightly more than 4 years.
Barclays Muni Bond Index: Bonds must have a minimum credit rating of at least Baa, an
outstanding par value of at least $3 million, part of a transaction of at least $50 million, issued after
December 31, 1990 and have a year or longer remaining maturity.
Barclays 3 Year Muni Bond Index: Includes bonds that have a minimum credit rating of BAA3, are
issued as part of a deal of at least $50 million, have a minimum maturity of 2 years and a maximum
maturity of 4 years, and have been issued after December 31, 1990.
Barclays 7 Year Muni Bond Index: This index is a subset of the BC Municipal Bond Index. It
includes maturities of six to eight years.
Barclays Global Aggregate ex USD Index: Tracks investment-grade government, corporate,
agency, and mortgage-related bonds in markets outside the U.S. An international bond index.
BofA/ML US High Yield Master II Index: The US High Yield Master II Index tracks the performance
of below investment grade US dollar-denominated corporate bonds publicly issued in the US domestic
market, subject to various qualifications. A high yield taxable bond index.
Barclays US Treasury Bond Index: Measures the performance of public obligations of the US
Treasury with a remaining maturity of one year or more.
Barclays US MBS Index: Measures the performance of investment grade mortgage-backed pass-
through securities of GNMA, FNMA and FHLMC.
Barclays IG Corporate: Measures the performance of investment grade corporate bonds with a
remaining maturity of one year or more.
Citigroup Treasury Bill 3 Month: An unmanaged index of three-month Treasury bills.
Representative of short-term money market deposits, or “cash”.
S&P/LTSA Leveraged Loan: A broad index designed to reflect the performance of U.S. dollar
facilities in the leverage loan market.
Other Benchmarks
Dow Jones CSFB Managed Futures: Designed to provide transparent representation of managed
futures hedge fund performance. Funds are selected by Credit Suisse based on eligibility standards,
rebalanced semi-annually and performance is calculated quarterly.
Dow Jones CSFB Multi-Strategy: Designed to provide transparent representation of fund of hedge
fund performance. Funds are selected by Credit Suisse based on eligibility standards, rebalanced
semi-annually and performance is calculated quarterly.
Dow Jones CSFB Long/Short: Designed to provide transparent representation of long/short equity
hedge fund performance. Funds are selected by Credit Suisse based on eligibility standards,
rebalanced semi-annually and performance is calculated quarterly.